Ex-state budget officials pessimistic on deficit

Brian Feldt

Saturday

May 22, 2010 at 12:01 AMMay 22, 2010 at 10:15 PM

Three former Illinois officials with experience in budget issues expressed sympathy for those who have to figure out how to come up with the dough to mend state government’s estimated $13 billion deficit.

Steve Schnorf is happy he doesn’t have his old job.

The former budget director under Gov. Jim Edgar said he feels for the person who does.

He’s not alone.

Two other former Illinois officials with experience in budget issues also expressed sympathy for those who have to figure out how to come up with the dough to mend state government’s estimated $13 billion deficit.

The consensus? There are no easy solutions.

“There’s no longer a path out of this… They are in the worst of all worlds,” Schnorf said.

“The new governor is going to have to come in here with the intention that his entire term is going to be solely dedicated to the budget and making terrible, terrible decisions,” added Joan Walters, another of Edgar’s budget chiefs.

“Under the best of circumstances, it will be several years before we get back on track,” said Dawn Clark Netsch, a former state comptroller.

Can’t get a consensus

Such is the situation Illinois finds itself in — a backlog of unpaid bills, a budget deficit that grows by the day and a handful of quasi-sophisticated solutions patched together by a politically divided General Assembly that doesn’t appear willing to cooperate quickly enough to make a difference.

Lawmakers will try again when they return to Springfield next week.

Before they abruptly adjourned May 7 without a budget, several options were visited, but none gathered enough support to make it through the gridlocked House.

The Senate passed a spending plan that relied heavily on borrowing and avoided paying bills. It also agreed to give Quinn the authority to declare a “pension holiday,” meaning another delay in meeting the state’s pension obligations, and to spend money from restricted accounts at his own discretion.

But none of those measures were voted on by the Democrat-dominated House. And an unconvinced Republican Party stalemated the few that were brought to the floor.

“There’s just never going to be the votes or the power — from Republicans or Democrats — in any administration to just cut spending by $5 billion this year and $6 billion next year and not grow for another year,” Schnorf said. “It’s just never going to happen. It’s a theoretical situation.”

No more quick fixes

None of the proposals, the former officials say, address the real problem — that the state continues to spend more than it has, mainly due to not fully funding public pension systems.

“We quietly, without being clearly articulated or understood or appreciated, started living above our means,” Schnorf said. “We are driving a Cadillac when we can only afford a Buick, and we’re doing that by not paying our mortgage payment. We are spending mortgage money on day-to-day state government and spending more than we should be.

“What was serious problem in 2002 and 2003 has grown into a desperate problem in 2010 and 2011 with no light at the end of the tunnel,” he said.

Complicating matters is the idea of one-time revenue sources, Schnorf said. Quick-fix sources such as the federal stimulus have made the state reliant on bailouts designed to keep states afloat during tough times.

Instead of spending the stimulus money on paying off pension debts or unpaid bills, the state used it to plug holes left from cutting education money.

Now, that federal money is gone and state operations are expected to remain the same when more than $1 billion is missing from the equation.

Deterred by election

The immediate answer, Netsch said, lies in a mixture of the “big three,” raise taxes, cut spending and borrow.

“It’s going to have to be a combination, and that sounds like a simple thing to say, but it’s true,” she said. “It’s going to take cuts in programs and additional revenue. Anyone who says we can really begin to turn around without additional revenue is smoking something in their pipe.”

But before that happens, Netsch said leadership needs to step up to the plate and explain to voters and lawmakers the pros and cons of each idea.

And the fact that it’s an election year, according to Walters, should not be a deterrent in fixing the state’s financial woes.

“Hopefully whoever gets elected has it in the back of their mind that they have to do these tough things,” Walters said. “If you don’t, the minute you are elected and build your entire plan for the next four years; that will be very difficult to do. It consumes almost every policy-making bone in your body.”

Schnorf said he thinks House Speaker Michael Madigan, D-Chicago, has the answer but is holding it until after the November elections.

“I want to believe that there is someone out there with a strategy, with a plan,” Schnorf said, “that has an end game or a three- or four-year plan to get us out of this mess. If there is such a person, it is Mike Madigan.”

Multi-year strategy needed

What remains now is what lawmakers actually have the appetite to accomplish.

The Democrats who control both chambers of the General Assembly have until May 31 to craft a workable plan. After that date, a three-fifths supermajority vote in each chamber is required to pass the budget, meaning Republicans will have a greater say.

Democrats have enough votes to pass whatever they wish in the coming week but don’t seem keen on being the party that passes a tax increase or puts the state further into borrowing debt — not during an election year. The Democrats want cooperation from the GOP.

That cooperation seems unlikely, Walters said.

“The likelihood of getting off to a good start in this fiscal year seems slim to none,” Walters said.

“This is going to take a multi-year strategy, and everything would have to be on the table: huge cuts, a tax hike. … We’ve gone too long to make it a simple fix.”

Brian Feldt can be reached at 217-782-6292.

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